XN000022-1983-06-27 — Page 16

4

Because

growth that Hong Kong enjoyed in the latter half of the 1970s generated

a substantial increase in the demand for property of all kinds.

the supply response to this increase in demand took time, the initial

effect was to drive up the prices of both land and buildings. Supply

then substantially exceeded demand and in 1981 prices dropped rapidly

with further falls in 1982. This was caused by the normal operation of the

The Government market and commercial misjudgement, not by any Government actions.

has, in fact, done what it can to mitigate the effects on the economy as a whole.

It has maintained its own building programmes.

Otherwise the impact on

the construction industry would have been much greater. Nor is the

situation all gloom. Hong Kong now has an ample supply of good quality

commercial, industrial and residential property available at reasonable

prices to meet the needs of our business community and help to ease the

problem of housing the people in homes of their choice. Moreover,

despite the impression given by some commentators, a considerable amount

of privately-financed construction expenditure is still being undertaken

and, judging by future building plans, this will continue to be the case.

Adjustment problems in the property market have, in part, been

responsible for the trouble faced by a small number of deposit-taking

companies, but the banks and DTC's have generally done well in weathering

these rougher seas. The resilience of the large majority of them is in

no small way a credit to our much maligned system of supervision which

has been extended and improved, particularly as regards DTC's, in recent

years. I would note in passing that, even during this troubled period,

a number of foreign banks have sought and obtained licences to carry on

business in Hong Kong.

—

There have been casualties amongst the DTC's although many

fewer than some of the more vocal of the Government's critics would have

/one believe